Boulder enters next phase of municipalization

Next big decision will be whether to condemn Xcel's assets

Tim Hillman, of Boulder, holds up a flower in support of municipalization at a City Council meeting Tuesday night.
(
JEREMY PAPASSO
)

Boulder will enter the next phase of municipalization -- refining the modeling that so far has shown the city could provide cleaner energy at similar or lower costs to Xcel Energy, working with federal regulators to clarify whether Boulder is likely to owe stranded costs to Xcel, developing an appraisal of Xcel's assets and hiring an independent consultant to review previous analysis.

The Boulder City Council voted 8-1 Tuesday to move forward after hearing from dozens of speakers who favored the formation of a city energy utility.

Councilman Ken Wilson cast the lone no vote. Despite their skepticism about municipalization, council members Suzy Ageton and George Karakehian lent their support to the pro-municipalization majority because they want to see continued analysis of the pros and cons.

University of Colorado student Jennifer Dailey asked everyone in the crowded council chambers who supported municipalization to raise their hands, and most people did.

Boulder resident and environmental activist Neshama Abraham said the municipal utility would allow the city to make a big environmental impact.

"We are going to fight for our right to be off of fossil fuels," she said. "What excites me is the amount of renewable energy that is possible."

Supporters included some residents of county neighborhoods who would be served by a potential city utility.

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"I am a mother who is concerned that by the time my 5-year-old twin daughters are adults, they will be living in a planet that is in climate peril," said Kathy Ramirez-Aguilar, a member of a newly formed group of Gunbarrel residents in favor of municipalization. "We have an opportunity to be a leader and cause utilities around the nation to take a hard look at their practices."

Ramirez-Aguilar said members of her group are concerned county residents will be cut out of a city utility because it's too politically volatile to include them.

Other county residents have demanded that they get a vote on whether to join a municipal utility and say they are worried about increased rates.

"There is no service the city could provide that Xcel could not provide more efficiently and competitively with its economies of scale or that Xcel could not improve upon more efficiently and competitively," said county resident Ed Archibald. "Boulder forming a municipal utility will not shut down a single coal-powered plant anywhere. Electrons do not care where they are going."

City officials say their analysis shows Boulder could provide more than half the city's electricity from renewable sources almost immediately, while keeping rates similar to or lower than those charged by Xcel.

Much of that energy would come from wind energy "firmed" or stabilized by natural gas. Over time, the city would look to increase local generation from other renewable sources and support aggressive conservation efforts.

Mike Grim, executive manager of the municipal utility in Denton, Texas, gave a rousing presentation to the City Council about the successes that city has had in adding renewable energy, including wind and biogas, to its supply.

Grim described a community that was similar to Boulder in its relation to a larger metro area, its university, its large manufacturing customers. The utility offers free energy audits and significant solar rebates while providing 40 percent of energy from wind and keeping rates low. The last increase was in 2005, Grim said.

"I hope you catch us," Grim challenged Boulder as he described Denton's next renewable energy initiatives.

Tuesday's vote is not the final decision. The most final decision will come when the city issues bonds to buy Xcel's assets and start a utility, but the decision in August about whether to initiate condemnation proceeding is significant. The city cannot do that unless it is willing to pay at least its initial offer, and if the city backs out after starting condemnation -- whether due to escalating costs or changing political winds -- it could face financial penalties.

City Attorney Tom Carr said holding another citywide vote before bonds are issued, as some have suggested, would place the city in a "Catch-22" that would jeopardize the condemnation proceedings.

As Boulder continues to research municipalization, a working group is looking at ways to partner with Xcel Energy to achieve similar reductions in greenhouse gas emissions.

That group is expected to present its findings just a month before the City Council votes on condemnation.

Ageton asked how the city would do a thorough analysis of those options in such a short time period.

"It gives a false impression of an analysis I think is unlikely to happen," she said.

But Councilman Tim Plass, who made the motion to go forward, said Xcel has only itself to blame for the tight time frame for not agreeing to work with the city earlier.

Xcel Energy Regional Vice President Jerome Davis said the city is not adequately considering all the risks and costs and asked Boulder to work with Xcel.

"There should be a vigorous debate and vetting of the ideas," he said. "This is an issue of great magnitude that will have a profound impact on Xcel customers in and out of the city. We will continue to raise questions about the plan, and we will work with the task force to develop ideas that will achieve the city's goals faster and cheaper with Xcel than with the risky formation of a municipal utility."

Plass said Boulder has the opportunity to be a leader.

"We have a chance to be a city on a hill," he said. "I understand that our contribution to global greenhouse gas emissions is a drop in the bucket, but I think we can have a much larger impact. I don't see a lot of movement at the state and federal level, and I think a lot of the progress is going to come from the cities."

Wilson said Boulder will have less influence over large utilities if it breaks away from Xcel.

"If we form our own municipal utility, who will be there pushing Xcel at the state level?" Wilson asked. "I think that will be a loss. All that money and all that time could be used on renewable energy projects and conservation. That's a loss."

Ageton said she sees a lot of hope and desire in the community around municipalization, and she wants the independent consultant to let the city know whether its analysis is robust enough.

Councilman Macon Cowles told the gathered crowd that they were helping make municipalization happen.

"You people need to look around and thank yourselves because you are giving a gift to this community that is just beginning," he said.

Mike Grim, executive manager of the municipal utility in Denton, Texas, speaks to the crowded room at the Boulder City Council meeting Tuesday night. He gave a rousing presentation to the City Council about the successes that Denton has had in adding renewable energy to its supply. (JEREMY PAPASSO)

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